Hematopoietic cell processes, such as survival, proliferation, and differentiation are tightly regulated and mediated by extra cellular signals. Dysregulation of the intracellular processes initiated by such signals causes malfunctioning of hematopoietic cells, and eventually leads to hematological disorders. Our long-term objective is to characterize the signaling pathways involving the SHP-2 and SHP-1 protein tyrosine phosphatases that regulate hematopoietic cell processes. A negative regulatory role for the hematopoietic cell specific phosphatase-SHP-1 in hematopoietic cell responses to a variety of external stimuli has been documented. However, the biological and biochemical function of SHP-2 in hematopoietic cell regulation remains largely unknown. We previously demonstrated that SHP-2 was required for erythroid, myeloid, and lymphoid development. Interestingly, defective primitive hematopoiesis caused by the SHP-2 mutation was partially rescued by an additional SHP-1 mutation in SHP-2/SHP-1 double mutant embryos, suggesting that SHP-2 and SHP-1 function oppositely in hematopoietic cell development. More recent laboratory studies show that SHP-2 and SHP-1 do distinctively regulate hematopoietic cell growth and survival. Based on our preliminary studies, we hypothesize that SHP-2 phosphatase plays critical roles in mediating specific hematopoietic cell processes, and cooperates with SHP-1 phosphatase to properly control hematopoietic cell behavior. To further characterize the role of SHP-2 and its functional interaction with SHP-1 phosphatase in hematopoietic cell regulation, we propose to: 1) Analyze the function of and the relationship between the SHP-2 and SHP-1 phosphatases in primitive hematopoietic development; 2) Investigate the role of SHP-2 phosphatase in determining hematopoietic stem/progenitor cell repopulating activity by using a dominant negative approach; and 3) Define the signaling mechanisms of SHP-2 and SHP-1 in regulating hematopoietic cell proliferation and survival. The dual potential early yolk sac precursor cell lines as well as SHP-2 mutant, SHP-1 mutant, and SHP-2/SHP-1 double mutant hematopoietic cell lines we established have provided us with a unique opportunity to accomplish these goals. The results of these experiments should yield new insights into the intracellular signaling regulation of hematopoiesis, which may lead to novel therapeutic approaches for certain blood disorders.